Housing decline to bottom out in mid-2007: NAHB

Marketwatch ^ | 9-13-06 | Robert Schroeder,

[Hydroshock]

WASHINGTON (MarketWatch) -- A downswing in home sales and building should bottom out sometime during the middle of 2007 before recovering in the latter part of 2008, a home-building industry economist said Wednesday. In the meantime, said another economist, consumers shouldn't expect a "widespread" bust in home prices as some of the strength begins to dwindle from regional housing markets. The National Association of Home Builders' David Seiders and the Federal Deposit Insurance Corporation's Richard Brown were among four economists testifying Wednesday before two Senate Banking subcommittees' hearing about the housing bubble and its implications for the U.S. economy. All four -- including analysts from the National Association of Realtors and the Office of Federal Housing Enterprise Oversight -- agreed housing activity is slowing. Economists added the slowdown poses some risks to the U.S. economy but that a drop-off in activity isn't nationwide. Seiders said a "below-trend" performance for home sales and building is likely over the next two years. "The downswing in home sales and housing production should bottom out around the middle of next year before transitioning to a gradual recovery that will raise housing market activity back up toward sustainable trend by the latter part of 2008," Seiders told the subcommittees in prepared testimony. Brown, meanwhile, told senators that historically, widespread price busts haven't necessarily followed price booms

[Hydroshock]

Keep in mind this is from the National Association of Home Builders. I do not know how bad it will get but I do think it is goign to be worse then these people are saying.

[stylin19a]

now it's just a decline ? I thought it was a horrendous bubble burst....

At least you posted an article from an opposing view...good on you.

[Moonman62]

Countrywide wrote $40 billion in loans in August versus $36 billion in July. Maybe the bottom is already here.

[Moonman62]

But read Hydroshock's disclaimer. He thinks it's going to be much worse.

[Tulsa Ramjet]

I disagree. The country as a whole is not being affected. The coasts will be hit, but it doesn't mean a thing in little ol' Tulsa. Leveraging notional appreciation values has been a phenomenon of Cali, NY, and FL. Its a reality check. They are reaping what they sowed. The only real thing that affects housing, is anomoly events, such as dramatic employment events such as Enron, Worldcom (criminal accounting), 9/11 (terrorism). But even after 9/11, people still realized that have to live someone and make a living. Tulsa plane flights and employment are back to pre 9/11 levels.

[Hydroshock]

This is far from an unbiased source but it does offer something to the discussion none the less.

[Fan of Fiat]

[Hydroshock]

Keep in mind 40% of the new jobs created in the past 5 years have been tied to the housing sector. A drop in this, particularly a substantial drop will ripple through the economy.

[JasonC]

It's a relatively poor indicator. But sure, interest rates peaked in July at the long end and are down half a point since. The other major mortgage factor is that people are refinancing ARMs take out 1-5 years ago with rates in the basement, into fixed ones now. Which is a good trade.

[stylin19a]

so, that means New Orleans has all the workers they need ?
ditto Chicago's 19 billion dollar O'hare project ?

[stephenjohnbanker]

Prices in California have already seen a 10% correction, and it could slide even more in certain areas. Same with greater Phoenix.

[Tulsa Ramjet]

As did the dot.com expansion drive commercial and housing construction drive things in the late nineties. Just because we are not building "new housing" doesn't mean housing isn't available. keep in mind that many of those "new jobs" were filled by a general contractor "coyote" employing illegal bricklayers and roofers.

[Hydroshock]

Like I have said repeatedly I see signs of trouble on the horizon and my family is preparing for potential trouble.

[starfish923]

San Francisco: The house we lived in was $35,000. new in 1960.
We bought it in 1982 for $165,000. (Interest rates were 18%!!) and sold it in 2001 for $644,000.
The jump in price, percentage-wise, was greater from 1960-1982 than it was from 1982-2001.

Prices WILL NEVER drop so drastically to make up for the housing increases from 1960-1982.
Dips and depressions will occur and the huge 14% yearly value increases might not occur, but "bottoming out"? It's real-estate broker talk for "We can't buy TWO beamers this year, only ONE."

My 2 cents.

[M1Tanker]

I just bought my house... I've got to call Rove and have him stop the decline so I can build equity.

Another FReeper was right, it was a "bubble burst" and now it is just a "decline".....

Supply and demand. X number of people want Y number of houses. Right now we have more houses than people. Many of the new houses (here at least) are way overpriced, have no yards, are made of cheap material, and are just not worth the cost.

BTW, should not the left be shouting for joy that housing costs are going down so more of the "people" can buy homes? Oh, silly me, I forgot, the left could care less.

[wireman]

Prices in California have already seen a 10% correction, and it could slide even more in certain areas. Same with greater Phoenix.

True. But how much have prices gone up in the last five or six years? Unless you bought at or very near the top and maxed out the financing, you will be fine.

[stephenjohnbanker]

True.

[stephenjohnbanker]

" made of cheap material"

And built by quasi-slave illegal laborers, many of whom had never built a single home in their lives : )

[oldleft]

What happens on the coasts will effect the whole country. Lots of people have been leveraging the equity in their homes to buy second homes in places like Kansas and New Mexico. A drop in equity dries up that second home market in a hurry.

[jiggyboy]

Countrywide wrote $40 billion in loans in August versus $36 billion in July. Maybe the bottom is already here.

The fine print of Countrywide's quarterly reports reveals that they are gaining market share as their smaller competitors go out of business. A bigger piece of a smaller pie.